Still reeling from the effects of welfare reform, Medicaid programs may be facing even more changes under the budget bill making its way through Congress. With Medicare grabbing most of the newspaper headlines, consumer advocacy groups say significant proposed changes to the Medicaid program are going largely unnoticed. The budget bill gives states what they have always wanted—increased flexibility to place their Medicaid populations into mandatory managed care without obtaining federal approval. The bill could put into place basic national standards for Medicaid managed care that would help to ensure quality.
"This completely changes the dynamic," says Sara Rosenbaum, director of George Washington University. "The dynamic has been that the federal government allows Medicaid managed care with advance scrutiny of (the program’s) access and quality. Now, managed care would be the normal state of operation with no advance scrutiny, except of the contract."
States would only need to file a "state plan amendment" to do mandatory Medicaid managed care instead of obtaining a 1915(b) waiver from Medicaid’s "freedom-of-choice" provisions, a process governors have complained is onerous and causes unnecessary delays. The Health Care Financing Administration (HCFA) would review contracts valued at more than $1 million.
The bill eliminates the 75/25 rule requiring health plans serving Medicaid beneficiaries to have 25% commercial population. The 75/25 rule has served as a proxy for quality in Medicaid managed care in the absence of national standards.
Consumer advocacy groups, while acknowledging that HCFA oversight is not a guarantee of quality managed care and adequate safeguards, nevertheless worry about will happen if states don’t have to answer to HCFA quite as much.
"What is of grave concern is there is a general rolling back of the government’s role as an overseer of these contracts," says Claudia Schlosberg, National Health Law Program in Washington, D.C. "On the front end is the waiver and on the back end are the surveys (reviews) and enforcement. Now there is much greater reliance on self-monitoring."
As an authority on Medicaid managed care with a national perspective, HCFA was able to "beef up" the standards of state programs during its reviews, Ms. Schlosberg said. She also worries that if states don’t have to meet HCFA waiver requirements for public input and public responsiveness, there will be fewer opportunities for public participation in developing mandatory managed care programs.
"There’s a kind of throwing away of checks and balances on millions of lives and billions of dollars," said Ms. Schlosberg.
HCFA regroups
A total of 42 states have 1915(b) waivers. Many of those waivers only authorize mandatory managed care in part of the state. It’s not altogether clear how, or over what time frame, the 1915(b) waivers will be phased out. As the waivers expire and come up for renewal, they may be converted to state plan amendments. Lee Partridge, director of the health policy for the American Public Welfare Association, says states would still have to obtain waivers to do selective contracting.
Rachel Block, formerly director of the Medicaid managed care team, who is now heading up the data and systems group as HCFA reorganizes, says the biggest difference for states is likely to be that they will no longer have to go through the process of renewing their 1915(b) waivers every two years. Ms. Block said there will be more emphasis at HCFA on "monitoring of quality and on data collection which is where we should be putting our energies instead of on processing waivers." For instance, one priority area for HCFA are standards for provider network adequacy. States want guidance on this and the agency could set specific numbers or come up with guidelines.
If adopted, the national managed care standards would give HCFA "a more concrete framework to direct oversight" and a "legal authority and a stronger basis for oversight," said Ms. Block.
"What states are getting in return is predictability and consistency in how standards are applied to their programs," said Ms. Block.
Judy Waxman, director of government affairs for Families USA, says the managed care standards, which Families USA strongly supports, "are all extremely reasonable," and are similar to standards on access to providers, specialists, grievance processes, etc. that are already in place in many states and in the commercial markets. Her group feels that the standards can take the place of the waiver process and the 75/25 rule.
While many large HMOs are supporting the managed care standards, there is opposition from governors "who don’t want to be told what to do" and "don’t want anyone looking over their shoulder," Ms Waxman said.
Among supporters in managed care is The HMO Group, an association of non-profit HMOs that have historically participated in Medicaid managed care.
Curtis W. Kelley, director of government relations for The HMO Group, said "given the long history of abuse of Medicaid beneficiaries, there should be minimal federal standards. It’s too easy to take advantage of this population." Mr. Kelley said "a floor" of federal standards would help keep at bay the "fly-by-night" firms that fail to provide adequate care out of "incompetence, mismanagement or greed." If the 75/25 rule is abolished, the impact on quality in Medicaid plans will have to be watched carefully, he warns.
But, even those consumer groups that support national standards and a lesser role for HCFA say they are disturbed about what they see as the loss of an important quality assurance control. Under the proposed legislation, managed care organizations would not have to have an annual, external review by a Peer Review Organization (PRO) or other specified entity to participate in Medicaid. They would be "deemed" to be in compliance if they have private accreditation or a Medicare risk contract.
The change is intended to avoid duplication of effort in quality assurance monitoring. However, groups like the National Health Law Program and Families USA, worry that private accreditation may not examine aspects of quality that are important to the Medicaid population. The role of a private accrediting organization is very different from a public regulatory authority, they say. Also, they believe that more frequent monitoring is needed than would be required under the current proposals.
Furthermore, Ms. Schlosberg worries that the public may not have access to data if quality assurance reviews are limited to private accreditations. In litigation involving malpractice and negligent care in institutions, she said, the courts generally have not allowed public access to data from private accrediting firms and have guarded the confidentiality of these documents.
Vulnerable populations
Andy Webber, director of quality for the Consumer Coalition for Quality Health Care, in Washington, D.C., says cutting back the 1915(b) waiver process is a "major loss of an important consumer protection," particularly for vulnerable populations. States have had very little exposure to managed care for these populations, he said.
Exempted from the state plan option to do mandatory managed care are special needs children, in both the House and Senate versions, and dual eligibles in the Senate version.
"In all fairness, states have not run lemming-like to move their vulnerable populations into managed care. They have been fairly cautious," said Trish Riley, National Academy State Health Policy in Portland, ME. She adds, however, that it is still unclear what checks and balances there will be in the state plan option.
"It’s a big deal in principle for states to make a decision that historically had to be negotiated with the federal government," she said. However, she notes that not all states are moving in the direction of mandatory Medicaid managed care. Some states are finding that designing an attractive voluntary managed care program holds real benefits.
Contact Ms. Schlosberg at 202-887-5310 or Mr. Kelley at 202-393-0557.
Significant changes to Medicaid are overlooked in national budget debate, consumer groups say
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